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While many retailers across the country are seeing their sales take a dip as consumers tighten their spending, Walmart (WMT) , the largest retailer in the U.S., has managed to keep its sales afloat.
In its first-quarter earnings report for fiscal year 2026, Walmart revealed that its U.S. comparable sales increased by 4.5% year-over-year, while the average number of transactions and amount of money shoppers spent per purchase spiked.
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This increase in sales contributed to Walmart generating $5.7 billion in its U.S. operating income, which is 7% higher than what it earned during the same quarter last year.
Related: Walmart doubles down on harsh tactic to shrink threat of tariffs
During an earnings call on May 15, Walmart CEO Doug McMillon said the increased sales “were not driven by inflation,” but higher transactions. He also said that despite increased sales in health and grocery categories, the company has noticed customers are pulling back their spending in other areas.
“Health and wellness sales increased high teens, reflecting higher prescription volumes and over-the-counter sales, while general merchandise sales declined slightly with softness in electronics, home products, and sporting goods,” said McMillon.
Walmart CEO issues a stern warning amid growing threat
As Walmart faces increased momentum from consumers, McMillon has issued a major warning about the future of the company’s prices amid President Donald Trump’s ever-changing tariff policy (tariffs are taxes companies pay to import goods from overseas).
On April 2, Trump announced a 10% "baseline" tariff on all countries importing goods to the U.S., with roughly 60 countries seeing higher tariff rates. Then, on April 9, he enforced a 90-day pause on reciprocal tariffs on all countries (except China), dropping them to a universal rate of 10%. He also hiked tariffs on China to a whopping 145%.
However, earlier this week, Trump agreed to lower tariffs on China from 145% to 30% after recent negotiations.
McMillon said that despite Trump’s recent efforts to lower tariffs, Walmart still won't be able to fully absorb all of the extra costs it will face to import goods.
Related: Walmart responds to outrage over return of a harsh policy
“We will do our best to keep our prices as low as possible,” said McMillon. “But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins. In retail, managing inventory is always important. In this situation, it’s even more important and even more challenging.”